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    A051910   KR7051910008

LG CHEM, LTD.

(A051910)
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LG Chem profit surges on pandemic demand, EV battery sales improve

07/29/2021 | 06:06am EDT
The logo of LG Chem is seen at its office building in Seoul

SEOUL (Reuters) - South Korea's LG Chem Ltd on Thursday posted a four-fold surge in quarterly profit on pandemic-led demand for its chemicals used in making electronic products such as laptops and TVs, and said sales of batteries used in electric vehicles were improving.

The company's LG Energy Solution business, a supplier of batteries used in EVs made by General Motors Co and Tesla Inc, has thrived on growing demand for such cars in Europe and the United States. But analysts have said a months-long chip shortage that hit global auto production has recently weighed on LG Chem's profit.

"We are seeing gradual increases in our cylindrical battery shipments and we expect to see continuous growth as the global EV demand continues to grow," Chief Financial Officer Cha Dong-seok said during an earnings briefing on Thursday.

Recently, some executives at chipmakers and car companies have turned cautiously optimistic over a potential easing of the supply crunch in the second half of the year.

Still others, such as Stellantis, said they expect the shortage to continue well into next year.

LG Chem, which is on track to hive off its battery business, said on an analyst call that it plans to secure EV battery production capacity of 430 gigawatt hours in 2025 that could power about 11.6 million EVs. It had earlier forecast capacity of 155 GW hours for end 2021.

Earlier on Thursday, LG Chem said it would set up a $1.1 billion joint venture with Hyundai Motor Group to build a battery cell plant in Indonesia.

The company, which gets nearly 60% of its operating profit from its chemicals business, said operating profit jumped to 2.2 trillion won ($1.92 billion) for the April-June period.

The latest quarterly profit included a settlement payment from rival SK Innovation Co Ltd worth 1 trillion won ($872.5 million), and a previously announced 400 billion won cost to replace batteries for energy storage systems (ESS) after fire risks were found.

The quarterly profit beat an average broker forecast of 1.2 trillion won, compiled by Refinitiv SmartEstimate.

In April, SK Innovation said it would pay LG Chem nearly $2 billion to drop all litigation in a bitter trade secrets dispute that had threatened a plant in the U.S. state of Georgia which SK is building to supply Ford Motor Co and Volkswagen AG.

($1 = 1,146.7800 won)

(Reporting by Heekyong Yang and Joyce Lee; Editing by Christian Schmollinger, Sonali Paul and Anil D'Silva)

By Heekyong Yang and Joyce Lee


ę Reuters 2021
Stocks mentioned in the article
ChangeLast1st jan.
LG CHEM, LTD. 0.13% 761000 End-of-day quote.-7.65%
SK INNOVATION CO., LTD. 1.43% 249000 End-of-day quote.31.05%
TESLA, INC. 2.75% 774.39 Delayed Quote.9.74%
VOLKSWAGEN AG 0.04% 189.38 Delayed Quote.24.25%
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Analyst Recommendations on LG CHEM, LTD.
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Financials
Sales 2021 43 766 B 37,1 B 37,1 B
Net income 2021 4 119 B 3,49 B 3,49 B
Net Debt 2021 6 218 B 5,27 B 5,27 B
P/E ratio 2021 13,7x
Yield 2021 1,40%
Capitalization 56 191 B 47 568 M 47 650 M
EV / Sales 2021 1,43x
EV / Sales 2022 1,28x
Nbr of Employees -
Free-Float 59,6%
Chart LG CHEM, LTD.
Duration : Period :
LG Chem, Ltd. Technical Analysis Chart | A051910 | KR7051910008 | MarketScreener
Technical analysis trends LG CHEM, LTD.
Short TermMid-TermLong Term
TrendsBearishBearishNeutral
Income Statement Evolution
Consensus
Sell
Buy
Mean consensus BUY
Number of Analysts 28
Last Close Price 761 000,00 KRW
Average target price 1 125 142,86 KRW
Spread / Average Target 47,9%
EPS Revisions
Managers and Directors
Hak Cheol Shin Vice Chairman & Chief Executive Officer
Okdong Son President
Dong-Seok Cha Chief Financial Officer & Director
Jin-Soo Park Vice Chairman
Ki-Soo No CTO & President-Executive Board
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